We now outline a few interventions in more detail.
For each intervention, we draw attention to the dimensions along which it is expected to act (quantity, quality, supply-side, demand-side etc).
a. Udyog Sahayak Enterprise Network (USENET) for micro-enterprise19
A key aspect of increasing labour demand in the private sector is enabling the scale-up of microenterprises. Muralidharan, Paul, and Basole (2021) have proposed a national entrepreneurial system to improve ease of doing business (EDB) and assist scale-up of micro-enterprises. Micro and Small Enterprises (MSEs) can
create a large number of jobs, across India, for workers with a wide range of skills and education, provided they can scale-up their operations.
Out of a total of just over 63 million enterprises in the MSME sector, 62
million are informal micro and very small enterprises (MSEs). Of these, single worker firms (own-account) are 40 million, firms with 2 to 5 workers – are 22 million and firms with more than 5 but less than 10 are estimated at 1 million. 107.6 million workers (97 per cent of all employment in the MSME sector) are in the micro and small segment.
While fostering start-ups remains important to the economy, an equally if not more important policy aim should be to enable scale-up of existing MSEs. Scaling up at the micro level is not a matter of easing compliances or regulatory burden, since these firms are not registered with any entity as firms. Rather we have to look at avenues such as integration with digital platforms, securing of licenses (so that businesses can stop paying bribes), better access to formal finance and government schemes, and so on.
Thus, the MSME sector is extremely diverse and policy interventions need to be carefully tailored by firm size since the challenges faced are very different at different scales. For small and
medium firms who are likely to have more than 20 workers and a turnover greater than 5 crores, the policy focus ought to be on improving ease of doing business via simplification, rationalisation, and digitisation of compliances. But for
microenterprises which have less than 20 but more than 5 workers, with turnover greater than 50 lakhs, the emphasis should be on enabling growth by easing them into the formal system. The key here is that entrepreneurs should not be incentivised to stay tiny and expand via creation of more micro informal firms. Rather, they should see value in formalising.
For nano-enterprises with less than 5 workers and turnover of a few lakhs per annum (survivalist enterprises), the emphasis should be on skilling workers and placing them into larger firms as well as on enabling growth in-situ. The relevant policy levers here are matching informal workers to potential formal employers, better access to formal finance, better information on government schemes, licensing to prevent harassment by local officials, digitisation for market access and so on.
This can be done by creating a support system which will make MSEs go digital, find markets, secure credit, avail of government schemes, and meet compliances. The proposed Udyog Sahayak Enterprise Network (USENET) is that support system. The authors propose the creation of 18 lakh Udyog Sahayak Enterprises (USEs) to be created over 5 years as part of USENET project: 5 lakh in Year 1, 6 lakh more by Year 3 and 7 lakh more by Year 5 - with the aim of scaling up these MSEs and also improving the Ease of Doing Business (EDB) for millions of MSEs.
While fostering start-ups remains important to the economy, an equally if not more important policy aim should be to enable
scale-up of existing micro-enterprises.
USENET is an entrepreneurship model, with the Government of India catalysing the enablement of the factors that would lead to self-sustenance of the USEs. It is envisaged as a service/transaction oriented model with a large bouquet of services made available to the MSEs at their doorstep such as digitisation and formalisation, availing of government loans, subsidies or other benefits, ensuring compliance with local, regional, and national regulation, aiding partnership with digital marketing platforms and digital payment
platforms, etc.
USEs will be supported by a National Digital Ecosystem for MSMEs (NDEM) that will be built on the principle of technology as a public good. It will operate with the help of a single window access to enterprise support services and schemes of Central and State governments.
Udyog Sahayaks Entrepreneurs will be educated youth with 12th pass or graduate degrees who will be trained by the existing skilling ecosystem of the Skill Ministry. Thus the programme creates sustainable livelihoods for 18 lakh educated youth, in addition to enabling MSE growth and indirect job creation and consequent economic growth.
The support system provided by USENET will free up the micro-entrepreneur’s time to focus on enterprise growth. The resulting increase in value- added growth can create more jobs. Moreover, if the USENET system is able to assist firms in finding and hiring workers, employment elasticity in this sector can also increase.
The revenue model is that each USE works with a fixed set of client MSEs. Each Micro entrepreneur pays a modest monthly fee to the USE for their services of which 50 per cent can be reimbursed
commission from the private parties for enabling MSEs use their digital products. At the end of 5 years, income of the Udyog Sahayak entrepreneur is expected to be I1,33,000 per year. Lessons from Common Service Centre (village level
entrepreneur), BC, and Anganwadi models indicates that a sustainable flow of income of at least I12,000 per month is key to the success of the model.
Each USE will require a capex of I1,14, 000 of which 50 per cent is a grant from the government. Eighty per cent of working capital requirements will come in the form of a MUDRA loan. Youth will invest 50 per cent of the initial investment required and also 20 per cent of the margin money required for working capital loan from MUDRA bank. In the proposed model, the total government pay-out in Year 1 is I4,200 crores, and average over 5 years is I6,000 crores per year. Government spending per job created falls from I84,000 in Year One to I27,000 is Year Two to I3,000 in Year Ten.
The authors estimate that an additional 1 crore (10.3 million) jobs can be created over five years going up to nearly 6 crores (56.9 million) over 10 years. Based on GVA per worker observed in this sector, and assuming a 12 per cent nominal rate of growth in GVA, these jobs represent an additional economic value of I2,16,000 crores at the end of five years and over I19 lakh crores at the end of ten years.
At the end of five years, government investment shows a return of 712 per cent over 5 years and nearly 30 times over ten years.
b. Universal basic services20
A key public sector intervention that operates on the demand side as well as the supply side of the labour market, is effective spending on health and education. On the demand side, such spending creates employment in the delivery of these crucial
8. Policy recommendations for the short and medium term
system of delivering key services creating millions of good jobs in the process.
India continues to under-invest public resources on health and education relative not only to its richer peers such as Brazil, Russia, China and South Africa (BRICS countries), but also compared to some of its South Asian neighbours as well as sub-Saharan African countries. Since 2000, public expenditure on health and education as a percentage of GDP has stagnated. As a result, as demand for these services has increased, out-of-pocket expenditure has risen and is now higher in India than in many other countries of the world, many of which are poorer or have grown slower. There have been calls to increase the health budget from around 1 per cent to 3 per cent of GDP, and the education budget from 4 to 6 per cent of GDP. This will make enough resources available to eliminate existing shortfalls, expand capacity, and create decent jobs for millions of workers across the education and
health spectrum.
The Covid crisis has demonstrated how much we rely on front-line health as well as education workers to rapidly adapt to circumstances, and in the case of the former, put
lives at risk. This includes Accredited Social Health Assistants (ASHA) who are considered volunteers and are paid far below the minimum wage (see Box 8.1). It is imperative that these frontline workers are adequately compensated for the immense amount of work they do under difficult conditions.
A long-standing demand in this respect is a monthly honorarium of I12,000.21
While the human capital returns to such investment are obvious and proven multiple times over in many countries, a relatively under-emphasised aspect of such an expansion of public service provisioning is that it can generate a large number of good quality jobs requiring a range of skills and education levels.
These jobs are hard to mechanise because they
involve human interaction and are also hard to substitute with imports. If Anganwadi and ASHA workers are regularised and paid a salary, such investment has the potential to be repaid many times over, not only due to increased demand and multiplier effects, but also because such investments will increase productivity, and more importantly the quality of life in India’s villages and cities.
Abraham et al (2019) also show based on state-level analyses, that states with relatively higher public spending per capita also tend to have lower out-of- pocket expenses in private health facilities. They identify states that have performed relatively well in delivering public services controlling for per capita income, as well as states which provide public education that delivers outcomes on par with the private system and at a fraction of the cost to the household.
On the employment front, they find that a modest expansion of the current system, that consists of filling vacancies and eliminating shortfall in infrastructure in the health and education systems, can create more than 2 million jobs, which is around 15 per cent of the current workforce in these two sectors. Regularising the employment of anganwadi workers, ASHAs, helpers, and other contractual employees in the public health and education system can create good jobs for another 3 million workers.
It is imperative that ASHA and Anganwadi workers are adequately compensated for the immense amount of work they do under
difficult conditions.
Box 8.1 : India’s frontline workers
The SWI 2021 background paper by Sinha, Gupta, and Shriyan (2021) presents powerful testimonies from women frontline workers and quantitative data based on surveys conducted in Bihar and Telangana. The paper is based on data collected as part of a larger study on women workers in frontline public employment before the pandemic as well as data collected through phone surveys during lockdown.
The Integrated Child Development Programme (ICDS), a scheme of the Ministry of Women and Child Development, Government of India, was launched in 1975. It has since been universalised and its implementation got a fillip with Supreme Court orders in 2006. ICDS offers (a) supplementary nutrition (b) pre-school non-formal education (c) nutrition and health education (d) immunisation (e) health check-up and (f) referral services. These services are provided through Anganwadi centres (AWC) across the country. At present, there are about 1.4 million AWCs employing nearly 1.28 million Anganwadi Workers (AWWs) and about 1.16 million Anganwadi Helpers (AWHs). From 2005, under the National Rural Health Mission (NRHM), Accredited Social Health Activists (ASHA) workers have been recruited to act as the link between communities and the primary health care system. According to a response in the parliament1 in March, 2020, there are about 1.1 million ASHA workers in India selected from the local community they belong to. Importantly, all the AWWs, AWHs and ASHA workers are women.
Taken together AWW, AWH and ASHA workers form the triad of frontline workers who play complex multiple roles from being nutrition counsellors, community mobilisers, preschool
We do surveys based on areas. Based on my population, I have to take a survey of the number and details of pregnant women, details of
newborn, details of children from seven months to three years, details of adolescent girls, deliveries and deaths. I have to also give them food. Post- registration till delivery these pregnant women have to come to the centre for food. We serve food here at the centre. All this comes under Arogya Laxmi program, wherein we give them lunch every afternoon at the centre. We give children between seven months and three years, ration to take home and Balamrutham powder at their homes. We also maintain a record of deaths. There is a register for children. We make children do preschool activities.
They gave us a mobile last year to update reports on it every day. In that we have to update it based on our daily door to door surveys. We have to also give them advice and suggestions on what foods to eat and how to eat. We also make note on high- risk pregnancies and advise them to go for regular check-ups. Before lockdown, I used to work from nine to four at the anganwadi centre. Then four to six pm, I do house visits. Morning, before going to the centre sometimes, I finish my house visits. It’s proper full day work! (sighs) Medikonda is a very big Gram Panchayat. It has a population of 6,500.
Despite the monumental role played by AWCs in community development, nearly a quarter of them do not have drinking water facilities and about 36 per cent of them do not have toilets.2 Moreover the work and the contributions of AWWs and AWHs have largely remained invisible. They are not regular, salaried employees of the government. As per norms of the Seventh Central Pay Commission, the minimum monthly wages for a government employee must be I18,000. But, for instance, the
8. Policy recommendations for the short and medium term
of the ambit of minimum wage laws of the country.
ASHA workers are entitled to task-based incentives whose nature and amount vary from state to state.
On average, they earn about I6,000 per month and put in about 10 hours of work a day. The abysmally low wages and practically non-existent social security has meant that many ASHA workers have been regularly going on strike demanding higher wages and better working conditions. These have been the precarious circumstances of such a large female frontline workforce before the pandemic.
The pandemic worsened their insecurity, exposing them to higher risks and vulnerabilities without any recognition of dignified employment and fair remuneration. Immediately after the lockdown, these women frontline workers became the
primary agency for COVID relief work in rural India.
Overnight, in addition to their pre-existing set of tasks, the frontline workers were now in-charge of additional work such as curbing the infection spread, conducting door-to-door surveys, assisting with contact tracing, testing and spreading awareness.
The study outlines two major dimensions of hardships each of which have further subdivisions of hardship categories. First, all the frontline workers are unequivocally overworked. Second, they are undervalued which is not only exemplified by workers getting subsistence wages but also illustrated through several of them facing multiple forms of indignities. The woes of underpayment get further compounded by irregular payment cycles and routine delays in receiving payments.
For example, nearly one in five respondents had not received the previous month’s salaries. Given the hard work put in by them, such delays in wage payments have a discouraging effect on the workers to pursue this line of work. For example, Sameena (AWW, Bihar) said,
We do important work for the community, meet with a lot of women, that feels nice. Sometimes
when there are delays in payments and things, it becomes a problem. Right now, we haven’t been paid a salary for the last eight months. Even during lockdown we didn’t get paid. The extra money we were supposed to get has also not come. We brought it up in the meetings. Let’s see what they do. What’s worse is I still have not got paid for some months in 2016.
On most occasions, reimbursements for travel expenses get delayed by six months and on many occasions, even the paltry travel allowance of I200 per month is seldom paid. These get further magnified as the frontline workers receive scant support and training for their work owing to massive vacancies in block level functionaries. In response to a Right to Information (RTI) query, the authors point out that 30 per cent of the block level offices of ICDS are vacant. As per official norms, there should be one supervisor for every 25 AWCs. However, there is a 37 per cent shortfall of Anganwadi supervisors.
The story is not much different for ASHA workers and several positions of ASHA Facilitators continue to be vacant. During the pandemic, ASHA workers were entitled to an incentive of I1,000 per
month for COVID related work but none of the respondents in the two states surveyed by the authors received that amount at the time of the survey in July-August, 2020. Overall, about 42 per cent reported ‘more work than usual’ during the pandemic and this was in addition to the increased work on the home front.
Based on telephonic survey of respondents in Delhi and Bihar, Thorat et al. (2021), in their SWI 2021 Background Paper find that Anganwadi or ASHA workers were not available to assist young children, pregnant women, and nursing mothers in their health and nutritional needs. Rather, many of these workers were now engaged in gathering data about household members. On speaking with an ASHA worker in Sasaram district of Bihar, the
authors found that the workers received no specific instructions from higher authorities for the care of new-born children, pregnant women, or lactating mothers under such extraordinary circumstances.
She also responded negatively when asked if they took any special care or any other measures to ensure safe delivery for pregnant women. She further added that they worked in such a condition without proper masks, gloves, sanitisers, or other essential equipment.
AWWs, AWHs and ASHA workers are the most fundamental force working to improve nutrition parameters among rural children and women.
It is therefore imperative to improve their work
conditions, regularise their employment, increase their salaries and improve social protection measures. In addition, there is an urgent need to not just fill vacant positions but recruit more AWWs and AWHs per village. This will have the twin effect of aggressively working towards improving nutrition parameters while boosting the female Workforce Participation Rate (WPR).
1http://164.100.24.220/loksabhaquestions/annex/173/
AU3418.pdf
2https://indianexpress.com/article/opinion/columns/the- smart-anganwadi-7098591/
c. A multisectoral focus on culture, heritage, and tourism22
India’s multi-century, multi-cultural heritage in art, architecture, agriculture and light manufacturing is globally recognised. This cultural legacy transcends sectoral boundaries. Agricultural products, manufactured commodities (food and beverages, textiles, garments, leather, metal, wood, gems and jewellery) and services (tourism, arts, heritage building restoration and maintenance) come together to produce this immense heritage.
With respect to employment there are two big challenges here. First, increasing productivity and reforming institutions in existing clusters to ensure an improvement in livelihoods for artisans and other workers. Second, creating or reviving clusters to generate new employment. Several potential tourism opportunities lie unexploited all across the country, and many manufacturing clusters are declining. Despite policy attention afforded to it since Independence, it is fair to say that the sector is still not adequately leveraged particularly
The CHAT sector is dominated by MSMEs, it is labour-intensive, skill-intensive, and it is present in every part of the country, unlike large-scale manufacturing and modern services which are geographically concentrated. At the time of writing, more than 400 distinct Geographical Indications have been awarded to agricultural and manufactured goods, and thousands more can be added to the list. The ‘handicrafts’ sector consists of hundreds more clusters (large and small) and employs an estimated seven million people (though estimates vary widely). Artisanal industrial clusters in textiles, leather, footwear, food, metals, and many other areas, continue to employ millions of workers and contribute to exports despite facing severe infrastructural constraints, lack of lobbying power, and legacy issues such as exploitative value chains and trust deficits.
The export potential is also large. India’s share of global handmade exports was a mere 1.2 per cent in 2012, as against China’s 30 per cent. Countries